Demographic Winter and Taxes

April 17, 2012

Wendy Warcholik, Executive Director of Cornerstone, had the honor of speaking at the Tea Party Rally in Manchester on Sunday. It was a beautiful day, the crowd was enthusiastic, and the line-up of speakers was incredible. Wendy’s talk was titled “Demographic Winter and Taxes” from which the following is excerpted:

The sad reality is that New Hampshire’s families are under a state of siege. This siege stems from no-fault divorce, the universal availability of contraception, the legalization of abortion, the rise of cohabitation and today’s debate over same-s*x marriage.

Now the consequences of the decline in the family are becoming clear. Demographers are now tracking a new phenomenon that they have termed “Demographic Winter.”Demographic winter is the point where there are too few babies being born to support the current population level.

While it may be spring-like here today, more and more of New Hampshire is succumbing to Demographic Winter. In fact, just recently the U.S. Census Bureau released new population data for 2011 by county which showed that 3 counties are already in the red zone—Belknap, Carrol, and Coos—having fewer births than deaths. Five other counties—Grafton, Sullivan, Cheshire, Merrimack, and Strafford—are in the yellow zone with only a thin cushion of births over deaths.

So what does this have to with tax day? Put simply, a shrinking population base means the current tax burden will be spread over fewer people. As such, if the level of taxes doesn’t change, the tax burden we all pay will get higher.

In the long run, this is simply unsustainable since fewer people and a rising tax burden means that it will become much harder to generate economic growth. Without economic growth, Demographic Winter will be compounded by folks leaving to find greener pastures. This is a viscous cycle that we must start working to avoid TODAY–help Cornerstone’s efforts in avoiding this catastrophe by Donating Today.

One tax solution that Cornerstone supports is the enactment of what is commonly known as Education Savings Accounts (ESAs). New Hampshire’s version is embodied by HB 1607 which works via a business tax credit and is currently winding its way through Concord.

It goes without saying that education is the one of the largest expenses of raising a child. And New Hampshire already has one of the highest property tax burdens in the country.

And while we get decent returns for our money, it is simply not enough. ESAs would allow parents to decide the best form of schooling for their child—whether it’s a traditional public school, a charter school, a private school or, the biggest trend in education today, homeschooling—and would significantly help couples who desire to have a large family.

Additionally, ESAs would provide needed financial relief to current and future families. Under the status quo, any form of schooling beyond public schools comes at a steep financial penalty because families will always have to pay their property taxes in addition to their expenses for other options.

In the end, public policy must start recognizing the traditional family unit as the best and only way for the state to avoid the ills of Demographic Winter. Anything less will mean that we will leave our children a legacy of higher tax burdens and less economic prosperity.